tv Nightly Business Report PBS August 31, 2009 7:00pm-7:30pm EDT
captioning sponsored by wpbt mickey mouse and hannah montana are joining forces with spiderman and ironman in a deal worth $4 billion. they're not the only ones teaming up. >> susie: when it comes to a second stimulus package, more and more economists say it just doesn't add up. but there's no consensus when it comes to prospects for inflation and the timing of a recovery. >> you wouldn't want to pull the rug from american families trying to buy a house and from the financial system that only now is looking at a stabilizing housing factor. >> paul: that's what some experts say would happen if
uncle sam stopped buying mortgage-backed securitys. we'll look at options for reducing the fed spending spree. >> susie: days after announcing a new schedule for its green liner boeing announces a major management shake-up. details in tonight's stock in the news. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is nightly business report for monday august 30.
>> susie: good evening, everyone. the government needs to stop spending money on the u.s. economy. that's the conclusion today from a new poll of leading economists conducted by the national association of business economics. according to the survey, 76% of those economists do not believe a second stimulus package is necessary. saying the economy is now beginning to recover. instead, they say the u.s. government should cut spending over the next two years. scott gurvey has details. >> reporter: the economists polled were generally supportive of current fiscal
and monetary policy. but guarded about prospects for the future. four out of five say the government stimulus programs have added to g.d.p., but three out of four don't believe a second stimulus package is needed. one economist thinks the current stimulus package is enough. >> we've only allocated... we've allocated less than a third of it. the administration designed this thing to be a time-release capsule. expecting that expenditures would go on into 2010 and continue to give some support to the economy. so in a way we have a second stimulus package already in the books. >> reporter: whether or not it is needed, one economist believes more stimulus is something politicians will be unable to resist. >> i think there's a very good chance that we will get another stimulus package. i don't think it's going to be anywhere near as large as the february 2009 package. and it may be tacked on to other measures such as another extension of unemployment been
anys that then gets combined with some other measures in the run-up to the 2010 mid-term elections. >> reporter: on the issue of inflation the nabe and other economists are split. some believe the stimulus and budget deficits make inflation inevitable. others say the fed can keep it under control. >> there are a number of instruments that we have to exert restraint. there's no real limit to that so if they need to exert more restraint they can absolutely do that. i think the... this whole debate that the fed would be, you know, unable to fight an inflation threat is somewhat misguided in my view. >> reporter: there is also little agreement on the strength of the recovery and even on its timing. many economists say they watch the labor markets for key signs. >> we'll see a little more use of part-time labor. we'll see the workweek expanding. those are things we want to watch for. because we typically ask people to work longer weeks
before we hire new people. as we start getting into recovery. >> reporter: we'll see that information on friday in the august employment report. scott gurvey, nightly business report, new york. >> susie: a big merger monday on wall street. running the gamut from energy to entertainment. first baker hughes a buying b.j.services in a deal worth $5.5 billion. both firms are energy service companies and the move is a way to expand their range of products in prospects around the globe. the second big deal, spiderman is becoming the newest resident of the house of the mouse. walt disney is buying marvel entertainment for about $4 billion. the purchase brings a slew of well known film characters under the disney umbrella including spiedy, the x-man, captain america and the fantastic four. it's the biggest media deal for disney since it bought pixar animation studios back in 2006. it's also the first big media deal since the global financial crunch. analysts say it's another sign
that confidence is returning to the marketplace. small that revival of big takeover activity by disney could not counter a 6% plunge in the market as wall street opened with a sharp sell-off. an hour into trading the dow fell nearly 100 points while the nasdaq lost 30 points. the market improved a bit over the next several hours on a better than expected reading on midwest business activity. but after the big august rally, profit-taking prevailed and stocks ended broadly lower. the dow industrial average closed off 47.92 at 9496.28. the nasdaq composite was off 19.71 ending at 2009.06. standard and poors 500 lost 8.31 at 1020.62. in the bond market, the ten-year note rose 13...
>> susie: if you're cheating i don't your taxes the i.r.s. is going to roll out another weapon in its arsenal to catch you. your mortgage. the agency is going to look at mortgage interest data in tax returns and compare it to data from banks. the i.r.s. says it could be losing more than a billion dollars a year through those cracks. reconciling the two sets of numbers could turn up tens of thousands of people who aren't reporting or who are underreporting their actual income. small. >> paul: many of those mortgages are owned by uncle sam. the federal reserve has spend a trillion dollars to prop up the mortgage market this year. experts say bernanke plots an
exit strategy from all the credit-support programs the mortgage market may be the hardest to leave. darren gersh reports. >> reporter: here's the housing pop quiz. if the federal research stopped buying mortgage-backed securities right now, how much higher would mortgage rates be? a, a little higher. b, a lot higher. or c, so high i don't really want to find out. the correct answer, says mortgage expert guy, is c. >> it's guest mating but at least probably a full percent higher than they are now. nobody really knows. the fed jumped into the market when there was concern there weren't going to be enough investors in there. so, we don't know what it's like and nobody really wants to try it. >> reporter: the fed has already bought more than one trillion dollars in mortgage- backed securities this year. virtually all of the new housing debt issued in 2009. he says the fed will need to keep buying mortgage debt well into next year when the central bank may begin to wean the market from this
government subsidy. >> you start dialing back a little. you see what the impact is. are other investors stepping up to the plate to buy the stuff? are rates suddenly shooting up? >> reporter: along with the housing market itself, phil, a former treasury economist, says the last thing the federal reserve wants is to strangle the long-awaited turn- around in housing. >> you wouldn't want to pull the rug from american families. trying to buy a house. and from the financial system that only now is looking at a stabilizing housing sector. >> reporter: and there's another challenge for the fed's exit strategy. it's buying almost all the debt issued by the government- controlled mortgage giants fannie mae and freddie mac. congress is good to overhaul these government-sponsored enterprises or g.s.e.s for short. that's a fact that is not lost on the markets. >> it's going to be difficult for the fed to stop providing that liquidity for housing finance until we and until private investors understand the future of the g.s.e.s.
>> reporter: the fed has sold some of its mortgage debt to investors but still carries half a trillion dollars on its books. which presents a political problem. doug elliott studies the financial crisis for the brookings institution. he expects anyone making his or her living from housing will not be happy to see the fed leave the market. and will make that clear to members of congress. >> if somebody stops by and leaves you $100 on your doorstep every week, you may not need the money but you want them to keep doing it. >> reporter: one thing is certain. the federal reserve won't be able to leave the housing market until investors regain their faith in mortgage debt. and that day still appears a long way away. darren gersh, night lee business report, washington. >> susie: a leading republican lawmaker says he doesn't think a health care reform package will include a government-run option. but iowa senator charles grassley says he's still hopeful a deal can be worked out to overhaul the health care system. he told the a.p.today he thinks a final plan would be
smaller than first expected. grassley's one of six lawmakers trying to work out a compromise over health care. he says not everyone in that group opposes a public option but the reality is such an option may just not happen. >> susie: it looks like apple is about to show case the fruit of its labors. the company will hold a media event next week and is expected to roll out a new line of i-pod media players. but as is typical for the firm, apple is refusing to comment on the specifics. observers say look for new touch-and-nano models probably with digital or video cameras
on board. another big question for next tuesday's event, will ceo steve jobs make an apeernls. as you know, paul, jobs has returned to apple after a long medical leave. >> paul: if he shows up, susie, it would be his first public appearance since then. let's see what was making a public ace peerns in our stocks in the news tonight.
>> susie: paul, oil prices tumbled almost 4% today on those worries >> susie: paul, oil prices tumbled almost 4% today, on worries about china's economic recovery. in new york trading, october crude futures fell $2.78 to $69.96 a barrel. china is the world's second largest oil consumer, and until the recession hit, its appetite for fuel was driving economies around the globe, including cambodia. as ryan maelzer reports, the global slowdown has raised doubts about cambodia's plans to tap recent finds of oil and gas. >> reporter: strong demand from the u.s. and e.u. had been keeping cambodia's sewing machines working at full tilt. but in the past year, garment exports to those markets have slumped, costing thousands of workers their jobs. arjun goswami of the asian development bank says it's a huge blow for a country that still relies on foreign aid for close to half the government's budget. >> this is an open economy, it's a small economy, and it's not
very diversified, so there have been serious impacts. >> reporter: with tourism also hit hard, cambodia had hoped it would start to see revenues this year from the country's first ever oil and gas finds. the waters off cambodia's coast are estimated to contain about two billion barrels of oil-- small by global standards, but significant for one of the world's least developed countries. subbu bettadapura of consultancy frost and sullivan warns that extracting cambodia's reserves will be challenging. >> they are not in a big reservoir where you can go in and tap them. they are in various pools, so there is a technical challenge for companies to go in and try to monetize these reserves. >> reporter: chevron has been the most active company in exploring cambodia's oil potential. chevron is not saying how much oil it believes might be in its offshore block or when it might start commercial operations.
a company spokesman says chevron still has to hammer out legal and financial frameworks with the cambodian government, and those are serious shortcomings in a country that ranks among the most corrupt in asia. eleanor nichol of the watchdog group global witness has studied cambodia's nascent energy and mineral sectors. >> what you have is two sectors operating in what is effectively a regulatory vacuum with no public or parliamentary oversight. also, what we've seen happen previously in the forestry sector is that money generated from logging and extraction of that resource never reached the state coffers, and we want to try and avoid a duplication of the same patterns occurring again in the oil and mineral sectors. >> reporter: commerce minister cham prasidh rejects those concerns. >> we are not going to use this money to pump corruption or to encourage corruption, but the money properly managed, properly
monitored, and properly spent in the right places. >> reporter: cambodia is still hoping the oil will start flowing by 2012. analyst bettadapura says the timing could end up being a blessing. >> if they wait a little longer till oil prices pick up, then they are going to get much higher returns, and you need to consider the fact that the lifespan of this field is only ten years. >> reporter: the government estimates it should reap at least half a billion dollars a year from oil and gas, a huge boost to its revenues, which barely topped one billion dollars last year. rian maelzer, cambodia. >> susie: the world's biggest retailer is getting even bigger. wal-mart has added almost a million new items on its website. the shop is called the wal-mart marketplace. unless consumers buy items from a specific group of other retailers. those additional vendors will expand wal-mart's products in
areas like home goods, apparel, toys and baby items. anything bought from the marketplace outside retailers will be handled through wal-mart.com's checkout process. but the retailers themselves will manage other services like shipping, customer service and returns. >> paul: cash-strapped readers cut down on their news stand magazine purchases during the first half of the year. the decrease led to a 12% drop in single copy sales compare ed with the same period a year ago. most large circulation magazines saw slight declines in overall u.s. circulation while some posted small gains. the figures were released today by the audit bureau of circulations. women's magazines were among the hardest hit during recession single copy sales fall more than subscriptions because consumers are likely to refrain from impulse buys. tomorrow meet some of the people who make up the six million unemployed americans as we kick off our series "once upon a job."
>> susie: a former trader has been ordered to stand trial. jerome curve was fired last year after the french bank said he was involved in $7 billion in unauthorized trade. he is charged with fraud and breach of trust and could face five years in jail. he had allegedly been making rogue trade for years by the time the company final discovered it. >> reporter: it looks like the chicago cubs have hit a home run in court. a bankruptcy judge has cleared the way for the baseball team to be sold to the family of financer tom rickets. it's a deal with an $845 million price tag and includes control of wrigley field and a stake in comcast sports net. the bankrupt tribune company is selling the team and other assets to raise cash.
>> susie: here's a look at what's happening tomorrow. august auto sales are released, along with the institute for supply management's manufacturing for august and july construction spending. tonight's commentator says when it comes to turning around the economy, washington lawmakers can't do it alone. the private sector must pitch in. he's douglas holtz-eakin, president of d.h.e. consulting and former director of the congressional budget office.
>> recent weeks have seen a lot of promising news about the economy. consumer confidence is up, housing prices show signs of reversing a three-year slide, sales of both new and older homes are increasing, and the stock market continues to reach new highs for 2009-- all well and good. but we are a long way from a sustained recovery. what will it take? first and foremost, the financial sector will have to continue to heal itself. we have seen improvements in credit conditions, but banks continue to fail. small businesses will be at the heart of a rebound, and they remain starved for credit. the housing market turnaround will have to be real, and not just an artifact of government stimulus like the $8,000 tax credit for first-time buyers. consumers will have to spend enough-- not hand over fist, but enough to build a foundation for businesses to ramp up their purchases on new equipment, new technologies, and new buildings. in short, the private sector will have to take the lead. but that doesn't mean that washington doesn't have more work to do. it does-- hard work. it's not hard to spend $900
billion in stimulus. but recovery will not be sustained if threatened by a toxic mix of higher interest rates, currency instability, and inflation, and that is the threat posed by the administration's plan to borrow $9 trillion over the next ten years. the hard work-- cutting federal spending and raising more revenue-- comes next. let us hope congress and the administration do not delay. i'm doug holtz-eakin. >> paul: recapping today's market action, stocks end the day lower on investor concerns about an economic recovery. the dow fell almost 48 points, and the nasdaq lost 19. to learn more about the stories in tonight's broadcast, to watch our streaming video and to take part in our daily blog, go to "nightly business report" on pbs.org. you can also email us at email@example.com. >> susie: and finally, next monday marks the nation's 127th observance of labor day. the first one, back in 1882, was in new york city, a parade of about 10,000 workers organized by the carpenters' union.
within the next decade, more than half of the country's states had some kind of labor day, although there was no set date for it, so congress established labor day as a federal holiday in 1894, and president grover cleveland signed it into law. and we know, paul, it's the first monday in september, which also now traditionally marks the end of the summer holiday season for many americans. >> paul: and many, many happy parents watch their kids go back to school. >> susie: that's right. it is the beginning of back to school. >> paul: right. >> susie: that's "nightly business report" for friday, august 28. i'm susie gharib. good night, everyone, and have a great weekend. you, too, paul. >> paul: and you as well, susie. i'm paul kangas, wishing all of you the best of good buys. "nightly business report" is made possible by: